The closure of bank branches up and down the country is seeing small businesses facing many new tough challenges. This is due to a significant amount of small businesses dealing with cash and cheques as well as valuing face to face interaction with bank staff.
What does bank branch closures mean for small businesses?
The Federation of Small Business (FSB) says that the number of UK bank branches has halved to just over 8000 in the past 25 years. They also fear that many more branches are set to close meaning that the proximity of bank branches will become less as the distance between branches grows.
Chairman of FSB, Mike Cherry, says that many small businesses need over the counter banking facilities and the popularity of digital banking, cited as the main reason for branch closures, presents a lot of challenges. He said; “Our members highly value the face-to-face interaction they receive in-branch… with staff who often have a greater understanding of their business and the local economy,”
He added; “Small businesses are keen to embrace the opportunities of the digital economy… However, barriers towards digital inclusion, such as unreliable broadband connectivity, create serious challenges.”
The protocol agreement signed by banks, the government and consumer groups, regarding bank closures and what needs to be considered before closing the last branch in a town or village, is currently under review. Under the agreement, banks should be considering the proximity of alternative branches during a 12-week consultation before closure.
That proximity varies widely depending on mobility of those in the local area, so assessing the age profile of customers of that branch should be included in the review. However, this current agreement does not punish banks if they fail to provide an alternative when the last branch closes.
Although many small businesses are savvy online, there are those that have survived for many years dealing with cash and/or cheques and see no need to expand their offering to card and online payments. The closure of bank branches will hit them the hardest in their day-to-day dealings, regardless of how strong their business is or what sector they are in.
For many businesses and members of the public, this is something that needs to change to take into consideration customer and local business needs.